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Harvard Business Review: Why AI, not just data, should be driving decision making
Some decisions matter more than others The fact that operational decisions - individually small but large in number - matter as much or more as low volume strategic decisions is often overlooked. Lots is written about how to make better strategic decisions but it was refreshing to see the authors also focus on the bread-and-butter decisions that drive a company's interactions with its customers, partners, suppliers etc. EDM is focused on these decisions and on improving their precision, consistency and agility.
One of the key tenets of EDM is that it is not OK to sacrifice speed and agility adaptability to get better or more precise decisions. The modern business environment simply does not allow this. You must build decision-making processes, and decision-making systems, that deliver agility as well as precision. This is why EDM approaches leverage business rules management systems. Are you ready for a revolution? The countdown has begun!
Mobile messaging could be big for businesses — but it all hinges on the CIO. Under these conditions the individual may tend to find it very difficult to develop competence in dealing with feelings and interpersonal relationships. Also, in a world where the expression of feelings is not valued, individuals may build personal and organizational defenses to help them suppress their own feelings or inhibit others in such expression. Or they may refuse to consider ideas which, if explored, could expose suppressed feelings. Such a defensive reaction in an organization could eventually inhibit creativity and innovation during decision making.
The participants might learn to limit themselves to those ideas and values that were not threatening. They might also decrease their openness to new ideas and values. And as the degree of openness decreased, the capacity to experiment would also decrease, and fear of taking risks would increase. This would reduce the probability of experimentation, thus decreasing openness to new ideas still further and constricting risk taking even more than formerly. We would thereby have a closed circuit which could become an important cause of loss of vitality in an organization.
Interpersonal Barriers to Decision Making 67 Some Consequences Aside from the impact of values on vitality, what are some other consequences of the executive behavior patterns earlier described on top management decision making and on the effective functioning of the organization? For the sake of brevity, I shall include only examples of those consequences that were found to exist in one form or another in all organizations studied. For instance, consider what happened in one organization where a major administrative decision made during the period of the research was the establishment of several top management committees to explore basic longrange problems: As is customary with major decisions, the president discussed it in advance at a meeting of the executive committee.
He began the meeting by circulating, as a basis for discussion, a draft of the announcement of the committees. He raised a series of questions. The manner in which it was done was interesting. As he raised each issue, he kept assuring the president and the group that he was not against the concept. He just wanted to be certain that the executive committee was clear on what it was doing. Just asking. He remarked that many of these problems would not arise if the members of these new committees took an overall company point of view. The most responsibility some felt was that they should raise questions so the president would be clear about his not their decision.
At the next meeting the decision-making process was the same as at the first. The president circulated copies of the revised proposal. During this session a smaller number of executives asked questions. Two pushed with appropriate care the notion that the duties of one of the committees were defined too broadly.
This comment and the long list of examples may have communicated to others a feeling that the president was becoming impatient. When he finished, there was a lengthy silence. As I listened, I had begun to wonder about the commitment of the executive committee members to the idea. In subsequent interviews I asked each about his view of the proposal. Half felt that it was a good proposal. The other half had reservations ranging from moderate to serious. However, being loyal members, they would certainly do their best to make it work, they said.
Whenever they could not agree or whenever a decision went beyond their authority, the problem was supposed to be sent to the next higher level. The buck passing stopped at the highest level. A meeting with the president became a great event. Few difficulties were observed when the meeting was held to present a recommendation agreed to by all at the lower levels.
For example, a major error in the program, a major delay, or a major disagreement among the members was likely to cause such trouble. The dynamics of these meetings was very interesting. In one case the problem to present was a major delay in a development project. The information was usually presented in such a way that slowly and carefully the president was alerted to the fact that a major problem was about to be announced.
Apparently he felt the same way because he granted it. However, he took nearly 20 minutes to say that this shocked him; he was wondering if everyone was really doing everything they could; this was a serious problem; this was not the way he wanted to see things run; he was sure they would agree with him; and he wanted their assurances that this would be the final delay.
A careful listening to the tape after the meeting brought out the fact that no subordinate gave such assurances. They simply kept saying that they were doing their best; they had poured a lot into this; or they had the best technical know-how working on it. Another interesting observation is that most subordinates in this company, especially in presentations to the president, tended to go along with certain unwritten rules: 1.
Before you give any bad news, give good news. Especially emphasize the capacity of the department to work hard and to rebound from a failure. Play down the impact of a failure by emphasizing how close you came to achieving the target or how so on the target can be reached.
If neither seems reasonable, emphasize how difficult it is to define such targets, and point out that because the state of the art is so primitive, the original commitment was not a wise one. The president, however, confided to the researcher that he did not enjoy listening to long and, at times, dry presentations especially when he had seen most of the key data anyway.
However, he felt that it was important to go through this because it might give the subordinates a greater sense of commitment to the problem! This is not to imply that they are completely unaware; each individual usually senses some aspects of a problem. However, we rarely find an individ- Interpersonal Barriers to Decision Making 73 ual or group of individuals who is aware of enough of the scope and depth of a problem so that the need for effective action can be fully understood.
For example, during the study of the decision-making processes of the president and the 9 vice presidents of a firm with nearly 3, employees, I concluded that the members unknowingly behaved in such a way as not to encourage risk taking, openness, expression of feelings, and cohesive, trusting relationships. But subsequent interviews with the 10 top executives showed that they held a completely different point of view from mine.
Under our system the person who presents the issues has really thought them through. I went back and listened to all the interviews again. As I analyzed the tapes, I began to realize that an interesting set of contradictions arose during many of the interviews. What accounts for these contradictions? My explanation is that over time the executives had come to mirror, in their behavior, the values of their culture e. They had created a culture that reinforced their own leadership styles. If an executive wanted to behave differently, he probably ran the risk of being considered a deviant.
In most of the cases the executives decided to forgo this risk, and they behaved like the majority. These men, in order to live with themselves, probably had to develop various defenses and blinders about their acquiescence to an executive culture that may not have been the one they personally preferred and valued. The strength of this company lies in its top people. They are a dedicted, friendly group. We never have the kinds of disagreements and fights that I hear others do. Yes, the more I think of it, the more I feel this is a major weakness of the company.
What happened? I have no direct idea how my superior evaluates my work and feels about me. The group discussions are warm, friendly, not critical. We trust each other not to upset one another. We say pretty much what we think. We are careful not to say anything that will antagonize anyone. We respect and have faith in each other. People do not knowingly upset each other, so they are careful in what they say. The executive committee tackles all issues. The executive committee tends to spend too much time talking about relatively unimportant issues.
The executive committee makes decisions quickly and effectively. A big problem of the executive committee is that it takes forever and a day to make important decisions. The members trust each other. The members are careful not to say something that may make another member look bad. It may be misinterpreted. The executive committee makes the major policy decisions. On many major isues, decisions are really made outside the executive committee meetings. If our analysis was correct, we knew, then they should tend to report that the members of the executive committee were low in openness to uncomfortable information, risk taking, trust, and capacity to deal with conflicts openly, and high in conformity.
Low Interpersonal Barriers to Decision Making 77 feelings that their subordinates have about them. This finding is not startling in view of the fact that the executive problem-solving processes do not tend to reward the upward communication of information about interpersonal issues that is emotionally laden and risky to communicate. Interestingly, in all the cases that I have observed where the president asked for a discussion of any problems that the top and middle management men present thought important, the problems mentioned above were never raised.
The executives and managers reported that they were overloaded and that the situation was getting worse. As we will see, few of these suggestions made sense, since the men were asking either for increases in costs or for a decrease in the very controls that the top management used to administer the organization. Here is an example from an organization whose board we studied in some detail over a period of two years: The executives complained of three practices of the board about which the board members were apparently unaware: 1 the constant alteration of organizational positions and charts, and keeping the most up-to-date versions semiconfidential; 2 shifting top executives without adequate discussion with all executives involved and without clearly communicating the real reasons for the move; and 3 developing new departments with product goals that overlapped and competed with the goals of already existing departments.
The board members admitted these practices but tended not to see them as being incompatible with the interests of the organization. Unfortunately, it took months to inform the latter men, and in some cases it was never done. The department heads, on the other hand, reported different reactions.
The reasons given by the board for not being open about the evaluation again reflected adherence to the pyramidal values. These activities become most noticeable when the decision is an important one in terms of dollars or in terms of the impact on the various departments in the organization. The forces toward ineffectiveness operate most strongly during the important decision-making meetings. The group and organizational defenses operate most frequently when they can do the most harm to decisionmaking effectiveness.
Another interesting finding is that the more effective and more committed executives tend to be upset about these facts, whereas the less effective, less committed people tend simply to lament them. In short, it is the better executives who are negatively affected. What Can Be Done? What can the executive do to change this situation?
I wish that I could answer this question as fully as I should like to. Unfortunately, I cannot. Nevertheless, there are some suggestions I can make. Learning about these problems by listening to lectures, reading about them, or exploring them through cases is not adequate; an article or book can pose some issues and get thinking started, but—in this area, at least—it cannot change behavior.
Thus, in one study with 60 top executives: Lectures were given and cases discussed on this subject for nearly a week. A test at the end of the week showed that the executives rated the lecturers very high, liked the cases, and accepted the diagnoses. Yet when they attempted to apply their new-found knowledge outside the learning situation, most were unable to do so. The major problem was that they had not learned how to make these new ideas come to life in their behavior.
It sure is frustrating. For example: I studied a top management group for nearly four months through interviews and tape recordings of their decision-making meetings. Eventually, I fed back the analysis. The executives agreed with the diagnosis as well as with the statement by one executive that he found it depressing. Another executive, however, said he now felt that he had a clearer and more coherent picture of some of the causes of their problems, and he was going to change his behavior.
I predicted that he would probably find that he would be unable to change his behavior— Interpersonal Barriers to Decision Making 83 and even if he did change, his subordinates, peers, and superiors might resist dealing with him in the new way. The key to success was for them to be able to show these new strategies in their behavior. To my knowledge, behavior of this type, groups with these dynamics, and organizational cultures endowed with these characteristics were very difficult to change.
What kind of thin-skinned individuals would they be, how brittle would their groups and their organizations be if they could be altered that easily? Three of the executives decided that they were going to prove the prediction to be incorrect. They took my report and studied it carefully.
In one case the executive asked his subordinates to do the same. Then they tried to alter their behavior. According to their own accounts, they were unable to do so. My subsequent observations and interviews uncovered the fact that the first two changes were mistrusted by the subordinates, who had by now adapted to the old behavior of their superiors.
They tended to play it carefully and to be guarded. This hesitation aggravated the executives, who felt that their subordinates were not responding to their new behavior with the enthusiasm that they the superiors had expected. However, the executives did not deal with this issue openly. They kept working at trying to be rational, 84 Argyris patient, and rewarding. Eventually, the process of influencing subordinates slowed down so much that the senior men returned to their more controlling styles. The reason I doubt that these approaches will provide anything but temporary cures is that they do not go far enough.
If changes are going to be made in the behavior of an executive, if trust is to be developed, if risk taking is to flourish, he must be placed in a different situation. He should be helped to a expose his leadership style so that he and others can take a look at its true impact; b deepen his awareness of himself and the dynamics of effective leadership; and c strive for these goals under conditions where he is in control of the amount, pace, and depth of learning.
These conditions for learning are difficult to achieve. Ideally, they require the help of a professional consultant. Also, it would be important to get away from the organization—its interruptions, pressures, and daily administrative tensions. He can also strive to find time to uncover, through careful questioning, his impact on others.
Some presidents feel uncomfortable in raising these questions, and others point out that the vice presidents are also uncomfortable. I can see how both would have such feelings. A chief executive officer may feel that he is showing weakness by asking his subordinates about his impact. The subordinate may or may not feel this way, but he may sense that his chief does, and that is enough to make him uncomfortable. Yet in two companies I have studied where such questions were asked, superiors and subordinates soon learned that authority which gained strength by a lack of openness was weak and brittle, whereas authority resting on open feedback from below was truly strong and viable.
I doubt, however, if either of the two leadership patterns described earlier will help the situation. As we have seen, both patterns tend to make the executive group increasingly less effective. If my data are valid, the search process in executive decision making has become so complicated that group participation is essential. No one man seems to be able to have all the knowledge necessary to make an effective decision. If individual contributions are necessary in group meetings, it is important that a climate be created that does not discourage innovation, risk taking, and honest leveling between managers in their conversations with one another.
The value of a group is to maximize individual contributions. Interestingly, the chief executive officers in these studies are rarely observed making policy decisions in the classic sense, viz. This does not mean that they shy away from taking responsibility. Quite the contrary. Many report that they enjoy making decisions by themselves. Their big frustration comes from realizing that most of the major decisions they face are extremely complex and require the coordinated, honest inputs of many different executives.
They are impatient at the slowness of meetings, the increasingly quantitative nature of the inputs, and, in many cases, their ignorance of what the staff groups did to the decision inputs long before they received them. The more management deals with complexity by the use of computers and quantitative approaches, the more it will be forced to work with inputs of many different people, and the more important will be the group Interpersonal Barriers to Decision Making 87 dynamics of decision-making meetings. If anyone doubts this, let him observe the dry runs subordinates go through to get a presentation ready for the top.
He will observe, I believe, that much data are included and excluded by subordinates on the basis of what they believe those at the top can hear. In short, one of the main tasks of the chief executive is to build and maintain an effective decision-making network. I doubt that he has much choice except to spend time in exploring how well his group functions. Such explorations could occur during the regular workday. For example: In one organization the president began by periodically asking members of his top group, immediately after a decision was made, to think back during the meeting and describe when they felt that the group was not being as effective as they wished.
How could these conditions be altered? As trust and openness increased, the members began to level with each other as to when they were inhibited, irritated, suppressed, confused, and withholding information. The president tried to be as encouraging as he could, and he especially rewarded people who truly leveled.
Soon the executives began to think of mechanisms they could build into their group functioning so they would be alerted to these group problems and correct them early.
At a later date, the group members can gather and listen to the tape. I believe it is safe to say that simply listening to the tape is an education in itself. If one can draw from skilled company or outside help, then useful analyses can be made of group or individual behavior. The directors met once a month and listened to tape recordings of their monthly board meetings. With my help they analyzed their behavior, trying to find how they could improve their individual and group effectiveness. Listening to tapes became a very involving experience for them. They spent nearly four hours in the first meeting discussing less than ten minutes of the tape.
Executive A would respond to this by insisting that he was not upset. Why should I be upset? When Executive A eventually reached his breaking point, he too began to shout and fight. Progress achieved. As a result of the meetings, the executives reported in interviews, board members experienced fewer binds, less hostility, less frustration, and more constructive work. Here is an excerpt from the transcript of one discussion on this point: Executive A: My feeling is, as I have said, that we have just opened this thing up, and I for one feel that we have benefited a great deal from it.
I think I have improved; maybe I am merely reflecting the fact that you [Executive B] have improved.
Leaders as Decision Architects
But at least I think there has been improvement in our relationship. I also see signs of not as good a relationship in other places as there might be. I think on the whole we are much better off today than we were a year ago. Now we have a much clearer organization setup; if we were to sit down here and name the people, we would probably all name exactly the same people.
Is that right? Executive C: What do you think? Executive A: Would you like to venture to say why I think we have made progress and why I might be fooled? I might be all alone in this. What do you think? Whether it is institutional progress and whether it produces commensurate institutional benefits is a debatable question.
It may in fact do so. Do you agree? Executive C: Yes, I think so. Executive D: It has made us a great deal more aware of the extent and nature of the friction and clearly has made all of us intent on fighting less. Executive A: Well, if you and D are right, I would say for that reason we need more of the program.
These learning experiences are available at various university and National Training Laboratory executive programs. They can also be tailormade for the individual organization. I believe outside programs offer the better way of becoming acquainted with this type of learning. Bear in mind, though, that since typically only one or two executives attend from the same organization, the biggest payoff is for the individual. The inside program provides greater possibilities for payoff to the organization.
At the same time, however, it should also be kept in mind that in-house programs can be dangerous to the organization. I would recommend that a thorough study 92 Argyris be made ahead of time to ascertain whether or not a laboratory educational experience would be helpful to company executives individually and to the organization. I have never studied a group or an organization that was decaying where there were not some members who were aware that decay was occurring.
Accordingly, one key to group and organizational effectiveness is to get this knowledge out into the open and to discuss it thoroughly. Without proper maintenance, all will fail. The main focus of the investigation reported here was on the behavior of top executives in these companies.
The executives were board members, executive committee members, upper-level managers, and in a few cases middle-level managers. Interpersonal Barriers to Decision Making 93 Approximately decision-making meetings were studied and nearly 10, units of behavior analyzed. The topics of the meetings ranged widely, covering investment decisions, new products, manufacturing problems, marketing strategies, new pricing policies, administrative changes, and personnel issues.
All other meetings were taped also, but analyzed at a later time. The major device for analyzing the tapes was a new system of categories for scoring decision-making meetings. A second scoring system was developed to produce a quantitative index of the norms of the executive culture. There were both positive and negative norms. The positive norms were: 1. The negative norms were: 1. Antagonism toward these ideas and feelings. Mistrust of these ideas and feelings. In addition to our observations of the men at work, at least one semistructured interview was conducted with each executive.
All of these interviews were likewise taped, and the typewritten protocols served as the basis for further analysis. Since values arise from basic psychological characteristics of man, it is not the existence or nonexistence of values that distinguishes a man from his neighbor. Solutions of convenience can be implemented with life departmentalized and fragmented.
These are the solutions of men who see most problems as unpleasant. There are those, however, for whom a problem can be a challenge to understanding. And the answer is nothing more than the realization that, for the time being, there is no pat answer. It is possible that there will never be a solution other than this. Achievements will always, hopefully, fall short of aspirations. Each new experience brings the possibility of even Interpersonal Barriers to Decision Making 95 richer insights.
Progress is made, but the farther man proceeds the more rapidly his horizons broaden. Notes 1. For a detailed discussion of the system of categories, and other aspects of methodology, see my book, Organization and Innovation Homewood, Illinois, Richard D. Irwin, Inc. Blake, J. Mouton, L. Barnes, and L. The manager who is trying to resolve these dilemmas needs your help. There will be a sequel. But close observation of their actual practices has shown that even veteran managers are likely to be very unsystematic when dealing with problems and decisions.
And their hit-or-miss methods often produce decisions based on erroneous conclusions, which means that the decisions must also be wrong. Kepner, a social psychologist, and Benjamin B. Tregoe, a sociologist, to develop a systematic approach to problem solving and decision making. A description of the research and training methods developed by Kepner-Tregoe and Associates of Princeton, N. J, was presented to HBR readers in an earlier issue. These concepts are shortly to be published in book form. Readers are therefore invited to test their own reasoning powers against the problems presented in the case history, based directly on an actual situation, set forth below.
The Burred Panels The problems to be solved are presented in the form of dialogues between various managers in a plant which manufactures quarter panels—the body parts that cover the front quarters of the car, including the wheels. The quarter panel is the successor to the fender, and is the part most often damaged in collisions in traffic accidents. This plant has 3, employees and makes not only quarter panels but many other smaller parts and components for two of the models sold by one of the Big Three auto companies.
The panels are made on four separate production lines, each line headed by a huge hydraulic press that Can You Analyze This Problem? When the flat steel arrives at the plant from various suppliers by rail, it is unloaded and carried to a machine which cuts identical-size blanks for all four hydraulic presses. Blanks go to the presses by forklift trucks in pallet stacks of 40 each, and the schedule is so arranged that there is always a supply on hand when the presses are started up on the morning shift.
Both new models of the Panther and the Cheetah are going over big, and if we slow down on panels, the old man in Detroit will be on my neck fast. Sheets all look nice and clean going into the press, but many come out rough as hell. He says the inspectors report that rejects rose from the normal one or two an hour to eight or nine in the last hour. He says the men on his line are mad as hell over his suspending Joe Valenti yesterday, and he had another argument when Valenti came in this morning against orders and tried to take back his press job.
Farrell called the guard and had Valenti escorted to the gate. I never heard about this. He turns to Industrial Relations Manager Coggin. Ralph, what about this? Farrell says he saw Valenti go behind the tool crib yesterday afternoon during the relief break, and Farrell swears Valenti had a bottle with him. You know how Farrell is about liquor, especially on the job. Anyway, he accused Valenti of drinking on the job again, and after some hot words he sent Valenti home for the rest of the week.
What has Valenti got to do with it? Coggin: Well, I talked with Patella, and he reports the men on all four lines are sore as hell. They made some sharp cracks about Farrell being a union-buster yesterday after the argument and again this morning when he threw Valenti out. When the drawpress on 2 started putting out a lot of rejects on Panther panels, and Quality Control reported this to Farrell, he went over to the press operator and made some suggestions on placing the sheets, or something like that.
The man just glared at him and said nothing, Patella tells me, and Farrell finally walked away. Then right after the men went back to work, Line 1 started to throw off rejects at a high rate. Burger: What does Adams think about this, Ralph? The die is OK, and the hydraulic system is OK. Burger: Yes, I think you can forget about trouble in the presses, Ben. My assistant, Jerry, tells me that Line 4 has just begun turning out a mess of burred rejects.
Polk: Well, that seems to knock out a theory I was getting ready to offer. Coggin: Same old stuff. He claims the company is trying to discredit the union with the men, especially now that contract negotiations are coming up next month. Check anything and everything you can think of. Peters goes to his quality-control records to see when the reject rate last hit its current level.
During the lunch hour in the cafeteria, an informal meeting of the four supervisors and Production Chief Bob Polk takes place. Farrell: I suppose you got the boss all straightened out on those rejects, Bob. Henschel: You can say that again! Polk: Keep a count on who makes the most rejects, and maybe we can pin this down to a few sore-heads.
As for me, I think Engineering will come up with the answer. Again this morning I had four stacks cluttering up my area. With my slow-speed old equipment, I could manage nicely with only one stack to start off. I noticed that Farrell had two stacks and Dawson had only one to start his line today, and why should they be getting favors?
You got an old clunker, and you know it. What you need is to get off that diet of Panther panels and join me banging out those shallow-draw panels for the Cheetah. Also, it might help you to smile now and then when one of your men cracks a joke. Adams: Aw, cut it, Farrell. That boozer is finally out of my hair. What bugs me is those rejects this morning. Never saw so many bad burrs show up so fast.
Henschel: They sure surprised me, too, but you know I think Quality Control may be a little bit overexcited about the burrs. I figure all of them could be reamed and filed out with a little handwork. Put two extra men on the line, and it would be all taken care of. Farrell: Maybe so, but you know how Burger would feel about the extra costs on top of the lower output. Patella: Why not? Farrell was miles off base sending Joe home yesterday without telling me or you or anyone else. I was glad Joe came back and faced that s. Can You Analyze This Problem? Coggin: What about that man who got hurt last night on overtime while unloading those sheets?
Coggin: Sure. Now how certain are you about Farrell not finding any bottle behind the tool crib after he suspended Valenti? Patella: OK, Ralph. Any clues to those burrs? Polk: Nope. Everything is OK with the machinery, according to Engineering.